Reverse mortgage will help you live out your retirement

Bequeath an apartment to a bank
Pensioners will be offered to improve the quality of life with a reverse mortgageAnastasia Matveeva, "Moscow News"

Banks are preparing to enter the market with a product for the elderly – a "reverse mortgage".

It is designed for retired homeowners at least 68 years old and is an analogue of a lifetime annuity, only instead of a person caring for an old man, a bank receives an apartment. So far, the pilot project of the "Reverse Mortgage" is carried out only by ARIZHK – the agency for the restructuring of mortgage housing loans.

As it became known to MN, since the end of last year, ARIZHK has been implementing the reverse mortgage program. The age of 68 was not chosen by chance: according to the results of 2011, the average life expectancy of a Russian is 70.3 years (this is on average, in fact, men live a little more than 64 years, and women – more than 76). That is, on average, payments will last from 2.5 to 3 years, which is quite beneficial for credit institutions.

ARIZHK considers a reverse mortgage to be a good alternative to a lifetime annuity: after mortgaging his apartment, a pensioner does not cease to be the owner of housing, and in the case of a lifetime annuity, the property is reissued to those who will take care of the old man. Another important difference between a reverse mortgage and a lifetime annuity is that the borrower (or heirs), at will, can repay the debt together with interest to the lender at any time.

The maximum loan amount is calculated individually and depends on the age of the borrower, the market value of the property and the form of payment (lump sum or monthly). ARIZHK evaluates the value of real estate independently, through an independent appraiser, all costs are covered by the agency.

The maximum repayment period is 10 years, the interest rate is 9% per annum. Borrowers can be both single citizens and a married couple. The ARIZHK calculated that the amount of monthly payments to pensioners could amount to 1.5 pensions for 10 years. If we take into account that the average old–age pension as of April 1, 2012 was increased to 9.8 thousand rubles, then such a payment will amount to an average of 14 thousand 700 rubles. - The calculation is based on the average cost of real estate in the amount of 1.8 million rubles. (two-room apartment). For Moscow and St. Petersburg, these figures will be significantly higher. Since the program is being implemented quite recently, there is no precedent for bringing it to an end – that is, not a single apartment mortgaged by a pensioner has yet been sold by the bank. The geography of applications for a loan is already quite extensive: ARIZHK has approved applications from residents of Moscow, St. Petersburg, Vologda, Orenburg.

To the delicate question of what will happen to a pensioner who will survive the 10 years required for payments, ARIZHK confidently answers that he will not be evicted to the street, and banks will not be at a loss either. "There is no probability of losses. Today, the agency plans to form the necessary reserves from the amounts of accrued interest. In the future, this reserve will be formed at the expense of insurance contributions from banks that issue loans under reverse mortgages. In turn, the participating banks will receive a guarantee of redemption of this mortgage in case the borrower survives the maximum settlement age," says Andrey Yazyk, CEO of the AHML IC.

If, on the contrary, the pensioner's life turned out to be too short, after the sale of the apartment, the bank receives an amount equal to the accrued interest and payments made to the pensioner. The remainder of these funds is transferred to the heirs.

There are certain requirements for an apartment that can be mortgaged. "The owners of this housing should be only retired borrowers. In the apartment, except for a pensioner or a couple of retirement age who plans to take out a reverse mortgage, minor children should not be registered, as well as incapacitated heirs for whom the mortgaged apartment is the only housing. If during the analysis of documents it becomes known about this, then the issuance of a reverse mortgage will most likely be refused, so as not to leave such people without a roof over their heads," Yazykov believes.

Another requirement for an apartment is that it should be in a house with at least 4 floors. "Considering only standard housing, we minimize possible errors in estimating its value. In addition, we are conducting a pilot in cities with a population of 500 thousand people, i.e. where housing has sufficient liquidity," is how this restriction is explained in the ARI.

So far, it is difficult to assume that this product will be very popular with banks. "As long as mortgage rates differ from reverse mortgage rates, interest will be low. I hope that when our pilot ends, the legislation on reverse mortgages will be adopted, the macro situation will improve and the rate of 9% per annum will cease to be "non–market", - believes Yazykov.

In order for this product to become attractive to banks, they will need "long" money, says Elena Klepikova, a representative of the International Finance Corporation. "This product should be in demand in regions where pensions are quite low, but at the same time there is an asset in the form of some kind of housing. Of course, this is a fairly new product for banks. There is a large complex of problems, society negatively assesses the adequacy of this proposal, many believe that elderly people are being robbed, because they receive an immeasurably smaller amount of money than what their apartment is worth," Klepikova believes. For banks, in addition to the fact that long credit resources are needed, it is necessary to have a good practice of forecasting housing prices for the medium term. "After all, there may be collapses in housing prices, it is not at all necessary that prices constantly rise, but for now, in my opinion, banks do not have such forecasting practices," the expert believes.

If the benefits of the "reverse mortgage" are correctly conveyed to the consumer, almost half of pensioners will want to use it, suggests Andrey Velichko, deputy head of the Department for Dealing with Distressed Assets of OTKRITIE Bank OJSC. Another thing is that the heirs at any time can repay the debt that has been formed to the bank, and it is easy to withdraw the pensioner's apartment from the mortgage, the expert points out. "That is, a pensioner can put his heirs before the fact: either the bank will pay me, or you. And I am writing a will for the one who pays this money. Single pensioners generally increase their chances of longevity by such a mortgage, because the mortgaged apartment can no longer be sold anywhere and they can no longer become the object of attack by black realtors."

Portal "Eternal youth" http://vechnayamolodost.ru19.10.2012